Phones4U 'mis-selling' allegations to be investigated by regulator

Phones 4U faces an investigation by the communications watchdog over allegations of mis-selling of mobile phone products and services.

Under the inquiry begun by Ofcom yesterday, the national mobile phone retail chain will take part in a six-month evidence-building process to establish selling practices at its 440-plus shops across the country.

The term "mis-selling" covers a variety of practices, including advising potential customers that their monthly bill is capped at a certain amount when it is not, providing such a short turnaround time to redeem cashback offers that it is almost impossible to claim the money, or offering upgrades or cancellation services without fully spelling out the charges involved.

The regulator is already drawing up a mandatory code of practice to make network operators more responsible for ensuring that retailers provide customers with all relevant facts about tariff packages and attendant rights when they are sold a mobile phone contract. The code will come into force in the autumn, after an attempt to institute a voluntary version which was judged in July last year not to be working.

But alongside the systemic measures, Ofcom will scrutinise Phones4U under the Enterprise Act because of the volume of complaints from the public about its practices.

Unofficial sources suggest the number of complaints may run as high as 2000 in the last few months alone.

"Our mobile mis-selling consultation is also ongoing, but we believe that the situation is serious enough to use different powers now to put an end to Phones 4U's alleged mis-selling," a spokeswoman for the regulator said.

The company says that it will co-operate fully with the process. "Phones 4U prides itself in maintaining the highest standards of customer service," a spokeswoman said. "If any instances where this has not been the case are brought to light, as a result of this inquiry, we will act accordingly."